Article Suggests Moving CDs into LTC

[ltcadviser]

Only the merits of the product mentioned in the current rate environment.


If you honestly want to discuss LTCI, then why not go back and actually consider the alternatives mentioned and compare them to a lumpsum hybrid?

Hasn't the current interest rate environment determined the pricing of many interest rate sensitive products: SPIAs, LTCI, ULs, Hybrid LTC, Fixed Annuities, CDs, Bonds? Please help me to understand how you cherry pick one product to critique but espouse the utilization of other policies similarly situated?

 

[scagnt83]

Or it can be a "we don't want to burden our children" conversation; or a "what if I never need care" conversation; or a "how many times can an insurance company raise rates" conversation.

All good points. And all protection related. Not necessarily asset protection... but not "not asset protection" either. No product exists in a bubble, and no 2 clients are alike. Which is why I am open to using more than 1 tool to solve a problem (that was not directed at you, just a general comment... dont want people to think Im being "nasty"...).

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Hasn't the current interest rate environment determined the pricing of many interest rate sensitive products: SPIAs, LTCI, ULs, Hybrid LTC, Fixed Annuities, CDs, Bonds? Please help me to understand how you cherry pick one product to critique but espouse the utilization of other policies similarly situated?

The current rate environment has deeply affected the entire insurance industry, especially on the life/health side.

I am not cherry picking.
I currently would not suggest a SPIA for most clients. I would not suggest a Lifetime Income Rider for most clients. And I have not sold a traditional UL in a couple years now (other than a conversion or two).

I also am not currently recommending any IA or FA over 7 or 8 years in length. And the selection of "competitive" annuity products is down to just a very small handful.

I did not espouse using Bonds, I only pointed out that there are Bonds paying over 3%. I did mention the 10 year FA, but again, that was just as an example of something that pays over 3%. Since you can get 2.75% on a 5 year FA, I would certainly recommend that over the 10 year option unless they just had to have 3%+.

So imo I am fairly consistent on the rate environment issue. You cant just stop selling because of interest rates. Especially on a medically underwritten and age based product like LTCI. But you can limit your exposure to historically low rates in certain circumstances.

jmo

 

[CALTCAgent]

Also, some ltci salespeople are completely uncomfortable in asking for a $100,000 or a $200,000 check (do not know why).

I think the reason some LTCi salespeople are not comfortable asking for 100k to 200K is many consumers do not like moving 100 to 200K so the salesperson takes a chance going down the single premium route.

It can be confusing presenting 2 concepts at once to consumers. You have to have people open to disclosing where the money is at. You also may have a little competition from a financial advisor when moving chunks of money.

I know this may not apply to guys on this forum, we are talking about some ltci salespeople.

 

[ltcadviser]

I think the reason some LTCi salespeople are not comfortable asking for 100k to 200K is many consumers do not like moving 100 to 200K so the salesperson takes a chance going down the single premium route.

It can be confusing presenting 2 concepts at once to consumers. You have to have people open to disclosing where the money is at. You also may have a little competition from a financial advisor when moving chunks of money.

I know this may not apply to guys on this forum, we are talking about some ltci salespeople.

Well, i think not feeling comfortable with presenting a $100,000 single pay solution as opposed to a $250.00 month lifetime pay solution might go hand-in hand with not feeling comfortable in having a conversation with the client about their complete financial picture.

 

[Tahoe Ray]

I see both sides both of this thread...

There are those who want a more complex strategy that logically and financially makes the most sense. Taking 100k out of the bank and moving it to an income producing vehicle to pay for traditional LTC can make for a strong protection play.

There are also those who prefer the simplicity of a single pay product...not to mention the flexibility, rate stability, and additional options.

Keep in mind the alternative...a number of the single pay policies are funded from 1035s and bank deposits (or mm brokerage). Very few of those products have any asset growth to begin with...

Like most products, neither option is "bad". They just fit different consumers.

 

[CALTCAgent]

Well, i think not feeling comfortable with presenting a $100,000 single pay solution as opposed to a $250.00 month lifetime pay solution might go hand-in hand with not feeling comfortable in having a conversation with the client about their complete financial picture.

I think it might. Time and distance can also factor in when talking about LTCi salespeople. To get a complete financial picture and be trusted enough for full disclosure can take more time.

 

[Tahoe Ray]

I think it might. Time and distance can also factor in when talking about LTCi salespeople. To get a complete financial picture and be trusted enough for full disclosure can take more time.

It shouldn't.....if they don't want to divulge that information up front, then they're not a good prospect.

How would one recommend an asset protection product like LTC without understanding their complete financial picture?

 

[CALTCAgent]

It shouldn't.....if they don't want to divulge that information up front, then they're not a good prospect.

I agree. Although I know some guys still try.

How would one recommend an asset protection product like LTC without understanding their complete financial picture?

You can't or shouldn't.

 

[scagnt83]

Like most products, neither option is "bad". They just fit different consumers.

Exactly. If the only tool you carry is a hammer then the screws are screwed.

 

[1reason]

It shouldn't.....if they don't want to divulge that information up front, then they're not a good prospect.

How would one recommend an asset protection product like LTC without understanding their complete financial picture?

Really good points, and from my experience, if you're not comfortable with large amounts of money and/or if you're thinking about a commission check, it's likely to change behavior.

At the end of the day, I think it's just relative numbers and the average person buying a single premium $600K policy may give it more thought than a $100K policy, but it's not a linear/or remotely correlated.

In fact, I think it may be the opposite. I think age may play a part in becoming comfortable, but my guess is that it's a matter of familiarity. If you work with "large" (as any given person defines it) enough, they "shrink" in importance. No different than a seasoned Ferrari or Chevy salesperson. I imagine the Ferrari salesperson feeling as comfortable through the process as the Chevy one....